Credit Suisse: Market odds of a policy error by Fed jump to 40%

The analysis on “The Eurodollar Curve” conducted by Credit Suisse found that “market-implied odds of the Federal Reserve committing a policy mistake have jumped to around 40% from just under 25% two weeks ago”

A policy mistake by the U.S. Federal Reserve Bank outranks all the scenarios being priced in by Eurodollar traders.

Credit Suisse strategist Jonathan Cohn wrote in a note Wednesday that the policy mistake scenario is defined as one in which the Fed begins lifting interest rates in late 2022, but can only hike a few times before having to stop.

Rising inflation worldwide has markets now considering interest rate increases, Credit Suisse noted.